Business Directories

IPIC launches review to study Ferrostaal future

Abu Dhabi, September 28, 2011

Abu Dhabi's International Petroleum Investment Company (IPIC) has launched a review of its 70 per cent-owned Ferrostaal to help chart the unit's future and resolve a dispute with Germany's MAN, from whom it bought the stake in 2009.

State-owned investment vehicle IPIC said it had appointed investment bank Morgan Stanley to carry out the review, but gave no detail about what it hoped the process would achieve.

IPIC bought the stake for $698 million, but by the time MAN tried to exercise a put option to sell the remaining 30 per cent to IPIC in early 2010, a bribery investigation had come to light at Ferrostaal.

German prosecutors brought bribery charges against two former managers of Ferrostaal in April and IPIC refused to buy the 30 per cent stake and sought to annul the original purchase agreement.

'We have asked Morgan Stanley to support our evaluation work, which focuses on the financial and strategic status of Ferrostaal, and avenues through which IPIC can assist the company,' IPIC said.

'IPIC continues to closely monitor Ferrostaal's operations and financial performance, consistent with its 70 per cent ownership,' it said.

A source close to IPIC said in May that talks between the two sides to resolve the situation had stalled.

IPIC, which invests across the energy sector for Abu Dhabi, yesterday hoped MAN would take part in the review as a shareholder.

A MAN spokesman said the company would not inject fresh equity into Ferrostaal, even if the Morgan Stanley review concluded that it was necessary.

'We had a contract with IPIC to sell our 30 per cent, so it would be contradictory were we to take part in a capital increase,' he said. 'That is not our intention.'